December 7 2018

Lahey Health and Beth Israel Merger Progressing, But With Restrictions

By: Rich Hosford

A merger between Lahey Health and Beth Israel Deaconess Medical Center got another step closer to becoming a reality.

The two hospital systems signed a Letter of Intent to explore creating a combined system that they say would help them deliver better care in Eastern Massachusetts.

In a release the two hospital systems said that while there is still a lot of work to be done to make this happen, a number of significant items have been addressed. Most notably, the letter of intent specifies that a combined system will initially adopt a model of shared governance that will lead to full integration of the two systems in a way that fosters collaboration and innovation and brings value to patients and the state of Massachusetts.

Under the terms of the merger, Kevin Tab of Beth Israel would assume the role of Chief Executive Officer and Ann-Ellen Hornidge, current Chair of Lahey Health Board of Trustees, would assume the role of Chair of the Board of the combined system. Both hospitals would name six members to the combined boards who would be joined by four to six independent members.

If the merger does happen it will face some restrictions from the state. Massachusetts Attorney General Maura Healey said her office reached a resolution with the proposed Beth Israel Lahey Health that includes a seven-year price cap and $71.6 million in financial commitments to support health care services for low-income and underserved communities in Massachusetts.

The agreement includes a series of enforceable conditions that also require the new entity to strengthen its commitment to MassHealth; engage in joint business planning with its safety net hospital affiliates and enhance access to mental health and substance use disorder treatment across the system.

Healey said seven year price cap says the combined entity’s price increases will be kept below the state’s Health Care Cost Growth benchmark, a state-set goal to control the annual growth of total medical spending currently set at 3.1 percent. Over the seven-year term, the cap will avoid more than $1 billion of the potential cost increases.


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